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Chinese bank to buy into SAfrican bank in US$5.46 billion deal

The deal between state-owned Industrial & Commercial Bank of China Ltd. and Standard Bank Group Ltd. is one of China’s biggest foreign corporate acquisitions to date.

The Chinese Banking Regulatory Commission has approved the plan by the Industrial and Commercial Bank of China to take the stake,’ the bank said in a brief statement on its Web site.

The statement did not provide financial details of the deal, which was announced last year, but the official Xinhua News Agency said it was worth US$5.46 billion (Ð3.67 billion).

The deal has already been approved by shareholders of both banks along with regulators in South Africa,’ the statement said.

The move comes amid a push by communist leaders for China’s companies to expand abroad to diversify the economy. Efforts have focused on developing ties with Africa as a potential source of energy, raw materials and markets for its booming economy.

China’s state-owned banks are growing rapidly amid an export-fueled economic boom and are expanding abroad to serve Chinese clients in foreign markets and to win international business.

ICBC’s decision in South Africa to take a minority stake instead of acquiring a bank outright was in line with a Chinese strategy of trying to avoid possible political frictions over buying assets abroad.

Chinese companies have been skittish about acquisitions since the uproar in 2005 over state-owned oil company CNOOC Ltd.’s attempt to buy US oil and gas producer Unocal Corp. CNOOC dropped its bid after American critics said it might endanger energy security.

ICBC is flush with cash to pay for foreign expansion after raising a record-setting US$21.9 billion in an initial public stock offering in October 2006.

ICBC says it has 1.1 trillion yuan (US$153 billion; Ð103 billion) in assets and reported profits in 2006 of 49.3 billion yuan (US$6.8 billion; Ð4.57 billion).

Standard Bank, headquartered in Johannesburg, operates in 38 countries and says it has assets of US$119 billion (Ð80 billion).

Beijing is encouraging Chinese companies to invest abroad in what it calls a go global’ strategy to diversify the economy and take advantage of international opportunities.

Chinese companies invested US$21 billion abroad in 2006, according to the government.